Today, in a speech at the American Enterprise Institute (AEI), U.S. Senator Mitt Romney (R-UT) outlined his vision for how public policy can best support American families. He then sat down with AEI President Robert Doar to discuss his recently proposed Family Security Act 2.0, which aims to reform existing, complex federal programs into one straightforward pro-family, pro-life, and pro-work benefit.
A full transcript of his speech can be found below the video:
It is delightful to be here at AEI. I appreciate the work that you do and the ideas that you provide. I also have to acknowledge that in developing this plan, my team has worked with a number of scholars here at AEI and some of our other institutions here in D.C. to get ideas and suggestions, so appreciate that work. Before I actually get into our proposal, I want to spend a little time talking about how we got here, and give a little history, if you will, about the Family Security Act.
It was twenty-six years ago when President Bill Clinton signed a law which ended welfare as we know it. You know that story, of course. It was designed to end some of the New Deal policies that trapped people into poverty, and it was largely successful. Teen pregnancy plummeted. Welfare rolls declined, poverty rates fell to below the levels that existed before that had been put in place.
Now, in the 21st Century we face new challenges, not just for welfare recipients and those that are locked into poverty—but for the American family itself. Marriages are declining in our country. Birth rates are declining in our country. And throughout government, it seems that federal policies exist that unintentionally discourage creating marriages, having families—basically creating a strong family unit. And of course, that’s essential to the success of children in our society.
Choosing whether or not to have a child is of course part of a very complex and personal decision process with a lot of factors to consider. But one of those factors to consider is the economics associated with having a child because there is a growing gap that has been seen between the number of children people say they want to have and the number they actually decide to have. To be clear here, I don’t think the federal government’s policies should be to try to create incentives to have people have more children than they want, but instead should find a way to bridge the gap between what people would like to have for their family and what they are able to afford.
To begin with, of course, federal policies ought to encourage people to get married—that I do think is something which is a positive, and basically remove the penalties that do exist if you do get married. Until very recent years, of course, that was a bipartisan political talking point. In 1994, Bill Clinton said during a State of the Union address, “We cannot renew our country when within a decade more than half of the children will be born into families where there has been no marriage.” At the time of course, 22 percent of mothers ages 25-29 were single.
Fast forward to 2008, then-Senator Obama said this: “If we are honest with ourselves, we’ll admit that what too many fathers are missing—missing from too many lives and too many homes. They have abandoned their responsibilities, acting like boys instead of men.” When Obama gave this speech, 33 percent of mothers ages 25-29 would be single—11 percentage points higher than when President Clinton was in office. That number today is over 40 percent and going higher.
Despite these worthy ambitions of former presidents, I am concerned that marriage—the foundation of our families—is even weaker still. Unfortunately, the decline in marriage is even more pronounced for low-income families than it is for other families. As a matter of fact, 60 percent of upper-income adults are married, but only 20 percent of low-income adults are married. That shift over the last 50 years is in no small measure the result of federal policies, which make it harder for low-income families to marry.
In some respects, it reminds me of the shadow of welfare, which welfare, and the way we had our welfare system prior to welfare reform, is it locked people into generational poverty. It was pointed out a number of times, by a number of people, that the highest marginal tax rate in America during the time of welfare was at a time when people were on welfare and were poor and if they wanted to get a job, every dollar they earned would result in a reduction—almost a reduction dollar for dollar—of what they were receiving in welfare benefits. So the tax rate was effectively 100 percent for going to work. Well, in some respects that same phenomenon exists with respect to marriage.
If a young woman living in poverty happens to be pregnant and decides to marry, she’s far less likely to qualify for Medicaid, housing vouchers, the Earned Income Tax Credit, and a lot more. The best way she can get support for her child is making sure she doesn’t get married. As a result, not surprisingly, a lot of people who are in poverty decide not to get married. It’s the same kind of phenomenon we’ve seen before. Now, in addition to discouraging marriage, our programs are really not doing enough to support expectant moms. One survey showed that the majority of women who choose to have an abortion did so because they were fearful that they would not be able to afford the cost of having a child. Think about that. So our policies are doing two things. One, they are encouraging people not to get married. Number two, they are making it more difficult to decide to have a child that you might otherwise want to bring into the earth.
Now, let’s look at an example. I am going to take the Earned Income Tax Credit. Let’s say a young woman finds out this summer that she’s expecting her first child. I’ll assume that she is working part-time and earning around $15,000/year. She would be eligible for more than $3,600 in the Earned Income Tax Credit. And yet, the Earned Income tax credit is not going to give her a dollar for transportation for going to the doctor. It’s not going to help her get a crib and stroller—even a car seat–because that’s not going to happen for quite some time. She won’t get her $3,600 until the spring of 2024 after her baby is nearly a year old. So think about that—for this young mom, it is a daunting financial hit to become pregnant, to have a child. You’re not going to get help from the Earned Income Tax Credit until at least your child is a year old. To address the concerns, both with regard to family formation—marriage—and the desire to help people who want to have a child be able to do so, along with Richard Burr and Steve Daines, we released a plan last month which we call the Family Security Act 2.0. 1.0 had some things, which people pointed out, that will never pass, so we put that aside, learned from the comments we received from Robert and others, and said let’s try 2.0 and see if it’s a little better. And by the way, let me note here, you see three Republican names. For this to become law, we are going to have to have some Democrat names. That means we are going to have to have a bipartisan negotiation. It will change again. There are some things in it I know the Democrats will find unacceptable, and we will negotiate it and see if we can find some common ground. I want to lay out some of the principles that we have put in place, because I think, in many cases, they will remain, and they are essential.
Under our plan, that same expectant mother that I described in that example will start getting $700 in the fifth month of pregnancy. So, she is going to have some funding to make sure she can outfit her home for the child that she will be bringing into the world. Also being able to make doctor visits, paying whatever co-pays she may have on pharmaceuticals she may need and so forth. Once the baby is born, she will get $350 per month, per child. Upon reaching school age, that number would go down to $250 per month.
In order to be eligible for the full benefit, the family income has to be at least $10,000. If the family income is less than $10,000, the benefit would be reduced proportionally, but once you get $10,000, that’s the amount. Now, you can tell, there’s an incentive in this to get married, because that’s $10,000 per household so that means if your spouse, or your boyfriend or girlfriend, or whatever, is earning money, your coming together makes it more likely you’ll get to the $10,000 minimum and you’ll be able to get the full benefit. So it encourages marriage, as opposed to discouraging marriage. And of course, the $10,000 figure is designed to be attainable—we aren’t talking about a high level of income, and it’s pretty simple for people to understand. They are going to be able to navigate receiving this benefit on a pretty straightforward basis.
Now, I’d also note that this is fully paid for. And that will be an essential ingredient in this plan or we won’t go forward with negotiations with our Democrat friends on anything else. How do we do that? Well, we take two current programs and either change them or collapse them entirely. So the Child Tax Credit, we collapse and use it to fund this program. And the family portion of the Earned Income Tax Credit likewise is adjusted to pay for this plan. And that’s where about $160 billion of the total funding comes from—those two programs. So, we get rid of programs and instead fund something that works better, that’s simpler, that’s easier to administer, easier to understand, that comes to people when they need it. And so, I think, a very substantial improvement of what we have now.
Right now of course, under the current plan, if you want to get the Earned Income Tax Credit, you’ve got to hire a tax preparer, most likely, to help you do the calculation to see if you qualify and that’s going to cost a few hundred dollars. There are a lot of people who—actually one-quarter of the people in this country who qualify for the child tax credit and earned income tax credit–one-quarter of the people that qualify for it don’t know it and don’t get it because they don’t know how to file the taxes and get the information that they need to be able to receive that benefit. The current system really doesn’t make a lot of sense.
Now, I know that the more progressive of my friends are not going to like this because the more progressive of my friends, any time there’s a need, instead of saying “what programs do we currently have that we could eliminate or adjust and allow them to pay for a better program.” Instead, their thought is, “Well, let’s just create a new one and add more money to all of them.” And that is the approach Washington has taken time and time again and it’s resulted in a morass of programs which are highly ineffective and in some respects are counterproductive.
And I can rattle off a list of some of those. I wrote them down. There’s $120 billion that we spend on the Child Tax Credit. $16 billion for TANF. $4 billion for the Child and Dependent Care Tax Credit. $27 billion for SNAP. $70 billion for the EITC. Section 8 housing, of course, is also available. CHIP. Head Start. WIC. It’s a mind-numbing list of programs for a person, for a new, pregnant mom to navigate. It’s expensive for the government. In some respects, it creates incentives that are counter to our national interest. Administratively, it’s massive. I mean, think of all the people it takes to gaming the system or even defrauding it in one way or another. And the message it sends to a young mom or a young couple is that the government is confused. That it doesn’t know how to help you. Our design is to see if we can’t have a message that’s pretty straightforward, which is, if you’re pregnant, we’re going to be able to help you with your expenses. And if you have a child, from day one, you’re going to be able to get a monthly check and those funds will be able to be used to buy clothing, to buy food, and so-forth. And you’ll be able to care for this child and won’t have to worry about the unaffordability of doing so.
It’s been 26 years since welfare reform—and I know many people here were very much involved in that and I congratulate you for that. That happened when there was a Democrat in the White House and Republicans in Congress. There are some who predict that we’ll be seeing the same thing for the next couple of years and it may present an opportunity for us to do something of the nature I’ve described.
So in my opinion, as we look at these programs, and this is, by the way, I don’t pretend like our Act solves all of the issues I’ve described and resolves all the morass of government programs. It doesn’t. But it takes on a couple of them and makes them work better. It reduces some of the disincentives towards marriage. It allows people to have a child if they feel they want to have a child and will know that they can financially afford doing so. And so it sends a very strong message: That we care about families. We care about helping people who decide to have a family. I think it’s a pro-marriage, pro-work, pro-family approach and hope that it can become, if you will, a bit of a rallying cry for those of us on the Right and hopefully for our friends on the Left, as well, to say, “Hey, let’s rethink how we’re doing things and see if we can do a better job for the American family.” Thanks.
